Canada’s CSA Labels Stablecoins as ‘Securities and/or Derivatives’

The Canadian Securities Administrators (CSA) is strengthening its oversight of the cryptocurrency industry following the collapse of FTX. It has expanded its requirements for crypto platforms operating in Canada.

The regulator will directly contact registered crypto platforms to discuss the new conditions while setting a deadline for registering unregistered platforms. Revamped conditions were justified, citing “recent events in the crypto market.”

A previous regulatory notice issued last August already requires unregistered crypto platforms offering services in Canada to provide the regulators with pre-registration undertakings that essentially commit them to comply with the terms and conditions being followed by registered firms.

“Crypto trading platforms giving these undertakings agree to comply with expanded terms and conditions that will include, among other things, requirements to hold Canadian clients’ assets with an appropriate custodian and segregate these assets from the platform’s proprietary business, as well as a prohibition on offering margin or leverage
Leverage

In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would…